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Tax in india on money transferred from finland to savings ac

Suren (ASE) (117 Points)

16 January 2015

I came to Finland on Jan 18 2014 and would be going back to India on March 20th 2015. For the Indian FY 2013 to 2014, i have already paid income taxes in India and Finland.

I have recently transferred ‘x’ lakh to my Indian regular savings account in Jan 2015.

I have heard that it would incur some taxes. Is that true ? how much % ? Is the tax calculated on the money transferred or on the interest earned ?

I believe i am not tax resident in India for FY 2014-2015. kindly confirm this as well

I wasn’t aware of NRE account so i transferred to normal savings account in India.

Waiting for reply. Any help would be really appreciated !

Many Thanks

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8 Replies

ronak (CA Final & Currently in service as an Accountant ) (85 Points)
Replied 16 January 2015

Since your stay in India for the FY 2014-15 is less than 60 days You will be considered as Non Resident for the purpose of ITA,1961.

However any income accrued OR received in India will be taxable if the aggregate of such income exceeds the minimum amount of income not chargeable to tax (Rs 250000 / Rs 300000 for senior citizens / Rs 500000 for super senior citizen ). Interest income will be included in computation of your taxable income. However the amount remitted by you from Finland to India won't be covered in the taxable income. You can claim deduction upto Rs 10000 on the savings account interest under section 80TTA from your gross total income

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Suren (ASE) (117 Points)
Replied 16 January 2015

Thanks alot for your response.
Just one more additional query :

I will have NRI status for the FY 2014-2015 i.e my foreign income is not taxable in India.

As you said interest on the saving account is taxable , so my question is Let’s say if i earn an interest of 30,000 INR in FY 14-15 for my savings in savings account in indian bank.

So as per Income tax act, interest up to 10,000 is not taxable ,so i need to pay tax on 20,000 INR .

Is that correct understanding ?

Also if i dont have any other income in fy 14-15 in India except the interest amount (20000), would i still be taxable since any income up to 2.5 lakh is tax free . Is that right ?

Thanks

ronak (CA Final & Currently in service as an Accountant ) (85 Points)
Replied 16 January 2015

Interest income is not seperately taxed

You won't have to pay tax on Rs 20000 since Taxable income computation includes Interest income.

You won't have pay any tax if your Taxable income doesn't exceed Rs 250000.

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Suren (ASE) (117 Points)
Replied 16 January 2015

Thank you . That was very helpful .

I am wondering what is the benefit of having NRE account then when i can simple transfer to my savings account ?

Thanks

ronak (CA Final & Currently in service as an Accountant ) (85 Points)
Replied 16 January 2015

Glad I could help.
I don't know the specific advantage of NRE account from tax point of view. I believe it permits you to make deposit in certain permissible foreign currency. Whereas in Savings account you have to convert currency in Indian Rupee before making a deposit. I too am not aware about any other advantage of NRE account

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Suren (ASE) (117 Points)
Replied 16 January 2015

Thanks.

Well as far as i could research, the NRE account mandates the deposit to be in INR only. The only advantage which i could see is :

1.In NRE account, you can maintain tax free interest on your savings

2. It's easy to identify the source of funds in NRE accounts as you cant transfer funds in to NRE from any resident accounts (savings etc ..)

Thanks.

1 Like

ronak (CA Final & Currently in service as an Accountant ) (85 Points)
Replied 17 January 2015

Thanks. Didn't knew that about NRE Account.

avinash soni (article) (25 Points)
Replied 17 January 2015

Well as per my point of view general purpose of maintaining a NRE is to make you available foreign currency. For those who tends to Im/export and has to pay and receive in forex will be benefiting since NRE a/c doesn't give you rs rather direct withdrawal of forex.